SWITZERLAND: August CPI / Q2 GDP Scheduled Thursday

Swiss August CPI data will be released tomorrow 07:30 BST / 08:30 CEST, followed in by a detailed Q2 GDP release at 08:00 BST / 09:00 CEST. The figures will form key inputs for the September 24 SNB decision, but even a large surprise seems unlikely to sway the bank away from a firmly priced hold at the meeting.

• Headline CPI is seen accelerating to 0.5% Y/Y after July's 0.35% print. A consensus print would mean Q3 CPI to date prints below the 0.6% SNB forecast. Despite this, the bank should remain calm around that, as they see inflation to accelerate gradually in coming quarters, with a temporary high of 0.8% in Q4 projected.
• This means the odds of a medium-term undershoot of the SNB's 0-2% target range are lower than they had been during the low-inflation period prior to the US-Iran war. The bank mirrored this assessment in their June minutes, saying "at present, inflation cannot be expected to rapidly rise above 2% or fall into negative territory", warranting a hold at 0%.
• On Swiss Q2 GDP, consensus sees confirmation of the notably high 1.5% Q/q flash print on a sports-event adjusted basis (which would imply a 6.0% SAAR rate). Recall that the statistics office added that "the industrial sector made the largest contribution to growth, which was driven in particular by the chemical and pharmaceutical industry. The services sector also grew as a whole" in terms of qualitative commentary to the flash release (which only contained the headline print).
• On the margin, higher growth acts as an inflation-positive over the medium term. Tomorrow's data will reveal to what extent the print is a one-off, which would reduce its feedthrough to projections for the likes of CPI.